When using the free-cash flow model, cash flows are discounted at the weighted average cost of capital (WACC) and when using the dividend discount model, dividends are discounted at….
FOR ESSAYS GURU ONLY 13
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1.3 Discussion: International Business.
“The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small local firms.”
I would like to start by saying I do not necessarily agree with the statement above. It is my understanding that this statement refers to the scope of local business and implies that small local firms have no effect on the global market. I do, however, believe that the global market weighs in every aspect of small local firms. While looking at the operations of small firms, we should really think about the markets they service before making assumptions that international business theory can be excluded from the process. Many of the materials we use in small operations may originate from global sources. Many of the small items we transfer ownership of within small business deals may originate from multi-nation sources, such as carbon fiber mountain bike frames from Taiwan, paired with rubber tires made in American and sourced from rubber from southeast Asia. While I do agree that the study of international business does apply to large multinational organizations. I do not think that the mindset of international operations should stay within large multinational firms. Since the turn of the century, barriers to trade have gone down significantly and expansion into small firms will be affected by several means. I believe it is important even for small business owners to understand trade laws, enterprises, and processes to understand how they may affect their own business operations. This can help small firms, stay competitive, contemplate stock outs and shortages, and compensate for issues that may arise in the global markets. Another thing to really think about when considering globalization is technology. With new and emerging business software, smaller firms can began to take on larger roles. Small local companies can expand their portfolio by outsourcing products such as consumer good manufacturing to an industrial specialist outside their regions. This sets economies of scale and can be especially beneficial for small firms seeking to maximize the products they produce and lower their own costs to produce. As our own textbook states “a firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business” (Hill&Hult, 2017). References Hill, M., Hult, C. (2017). International Business: Competing in The Global Market Place. (11th. Ed). New York, New York. McGraw-Hill Education.